PNC Healthcare Matters

Fall 2017 Issue

 

A Note From Brian Kelly, Head of PNC Healthcare

PNC Healthcare Matters is intended to provide key takeaways about the financial aspects of healthcare that you won’t find anywhere else. Our first newsletter was well-received and sparked some great conversations. We want to keep that momentum going.

In this edition you will find insight into improving patient-responsible payments; enterprise risk management and a new way for bond issuers to value call options for tax-exempt fixed rate bonds.

I hope you can also spend a minute with our overview of PNC Healthcare’s First Annual Healthcare Symposium and reach out to us for more information on any of these provocative topics.

Thank you again for your relationship with PNC Healthcare.

PRODUCT SPOTLIGHT

Refunding Valuation Analysis: An Issuer’s Decision Tool

PNC Capital Markets LLC has built a new model to value call options of tax-exempt fixed rate bonds to assess refunding efficiency. Called “ReVal," it differs from standard industry practice that typically use a form of the Black-Schole Option Pricing Model.

ReVal’s pragmatic approach to defining “Peak” Present Value Savings looks at historical relationships between MMD and U.S. Treasury securities to estimate a point in time that will achieve Peak Present Value Savings. Is the ratio of Refunding Efficiency sufficient to execute the trigger for your organization?  

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INDUSTRY SPOTLIGHT

Identifying and Collecting Patient-Responsible Balances

With the evolution of high-deductible health plans and health savings accounts, consumers are now responsible for a larger portion of their healthcare expenditures.  Currently 29% of covered workers are enrolled in a high-deductible health plan/healthcare reimbursement account (HDHP/HRA) or healthcare savings account (HSA-Qualified HDHP). This shift can lead to a rise in bad debt.

Many leading healthcare providers identify and collect patient-responsible balances prior to service and/or at the time of service, significantly increasing the likelihood of timely payment for services performed. Find out how your organization can benefit from these best practices.

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BY THE NUMBERS

Enterprise Risk Management: Consider Both Sides of the Balance Sheet

Incorporating both sides of the balance sheet can be essential to properly managing a healthcare organization’s enterprise risk in a holistic manner. Furthermore, doing so can help to maintain a level credit rating, stabilize Days Cash on Hand, and comply with debt covenants.

By performing an Enterprise Risk Management analysis, a healthcare system can calibrate its investment portfolio to help ensure that it is optimized relative to its liabilities. Over the near term, this can help to provide continuity of operations; over the long term, we believe that this can help to fuel organizational growth.

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STRATEGY SPOTLIGHT

Making Sense of Uncertainty: The First PNC Healthcare Executive Symposium

PNC Healthcare’s first annual PNC Healthcare Executive Symposium created a unique environment for executive level discussion and dialogue on key industry challenges.

Twenty-six CEOs and CFOs attended. Key organizations represented included Highmark, the Cleveland Clinic and Penn Medicine. The two-day event opened with a networking reception and a dinner presentation on cybersecurity, followed by a day of discussions about the key issues facing boards and management, including:

  • Industry disruption
  • The vision of an integrated delivery network
  • Federal update and healthcare forecast

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